Mortgage

A mortgage is a written lien upon real estate or a conditional transfer of title to real estate given as security by a mortgagor (the housing cooperative or the cooperative member) to the mortgagee (the finance institution). The term servicing includes all functions that the mortgagee performs: the disbursement of the loan funds, the collection of the loan payments, and the delivery of the cancelled loan contract to the mortgagor.

The loan’s terms, interest rate, and conditions (such as when it is due, what constitutes delinquency, the penalty for late payments, and so on) are described in the loan agreement.

In a blanket mortgage housing cooperative, the cooperative will have an occupancy agreement with each member that sets forth the conditions under which the member can use the house. The occupancy agreement will also establish what the member will pay the cooperative for the use of the house, when and where it is to be paid, and other conditions. The cooperative will use individual members’ payments to repay the mortgagee.

In a multiple mortgage cooperative, the individual members will repay the mortgagee in accordance with the terms and conditions of their own loan agreements.

The member’s monthly payment will include the principal and interest on the long-term mortgage loan, mortgage protection insurance, fire insurance, and cooperative fees for administration, management and reserves. In addition, the member will make an annual payment for land rent and land rates.

Delinquency

Delinquency is the failure to pay a financial obligation in accordance with the terms and conditions of a legal document. In the case of a blanket mortgage housing cooperative, the cooperative will have an occupancy agreement with each member. If the members do not pay the amount specified in the occupancy agreement, the cooperative will take legal action to expel them and replace them with others who can and will pay. Otherwise, the cooperative will not be able to meet its obligations to the financial institution, which would foreclose on the entire cooperative housing project. In the multiple mortgage housing cooperative, each member will repay their loan directly to the finance institution. If the members do not pay their agreed-upon amounts, the finance company will initiate legal action to evict them and auction off the property.

UPEHCO has set policies regarding payment default and delinquency. During project development until the house is delivered to the member, the monthly loan payments are made by the member to UPEHCO. However, once the title of the property is individualized in the names of the beneficiaries, the member pays directly to the finance institution, i.e. PAG-IBIG. To avoid speculation, UPEHCO shall undertake to annotate a condition in the individual titles granting the cooperative first purchase option (right of first refusal).